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SBA Loans: What are your options

7(a) loan

The SBA’s signature loan program offers working capital to small businesses up to $5 million dollars.

CDC/504 Loan

Small business financing tool designed to help with the purchase of real estate or equipment.


The SBA’s signature line of credit program offers flexibility to seasonal and other businesses with irregular cash flow

Export Loans

For small businesses who currently export (or have plans to) and need capital to help with expansion efforts into new markets


Small business up to $50.00 that are ideal for work-from-home business owners and freelancers

Disaster Loans

The only loan offered directly through the SBA, the Disaster loans help ease the financial burdens from natural and other disasters

With over $13.2 billion dollars in assets and a growth of 4.4 percent from 2016, the SBA is a powerful business partner whose resources and lending power continue to grow.

Since its founding in 1953, it’s been the SBA’s mission to help U.S. businesses grow.

To do that, the SBA has offered a myriad of resources to business owners, from loan guarantees to government contracts, business counseling, and many other forms of assistance.

And if recent growth is any indicator, the SBA isn’t about to slow down any time soon.

One of the greatest benefits the SBA offers is its lending programs, which encompass several different types of loans and other offerings to help fund your business.

Getting approved for an SBA loan isn’t easy, but if your business is in need of working capital, especially if you’re not a fan of the terms you’re being offered by certain lenders for other loan products, the various SBA loan offerings are worth taking a look at.

What is an SBA loan?

Chances are, you’ve heard of SBA loans before but aren’t exactly clear on what they are.

SBA loans are offered by the Small Business Administration (SBA) for the purpose of helping new and pre-existing small businesses grow.

With the exception of disaster loans, most SBA loans aren’t offered directly through the SBA but a third party lender working with the SBA to guarantee the loan (up to 85% of the loan amount).

The value in this agreement for you is that, because the SBA is guaranteeing a large portion of the loan for said lender, that lender can then offer you more favorable terms since their risk is greatly reduced. Such as:

  • Low-interest
  • Longer terms

And an SBA loan can be used for virtually anything depending on the type of SBA loan you get, including (but not limited to):

  • Equipment
  • Property purchase
  • Working capital
  • Inventory
  • New hires and training
  • Refinancing debt
  • Business aquisition

SBA loans pros and cons

SBA loans have a lot of benefits. However, like all loan products, the various SBA loans have both pros and cons that you should be aware of.

While each type of SBA loan has its own unique terms, because they’re all offered as part of the same overarching program through the SBA, they have certain collective terms and conditions which apply to all.

Here’s a quick breakdown of the basic terms which define SBA loans and their pros and cons:

  • Maximum loan amount: $5,000 – $5,000,000
  • Loan repayment term: 5-25 years
  • Interest rate: 6.25% and higher
  • Approval/funding speed: Slow (3-4 weeks with assistance from a lender)


  • Lower interest rates
  • Longer repayment terms
  • Lower down payments
  • Access to SBA tools and resources


  • Long approval process
  • Heavy paperwork
  • Difficult to get approved (Credit rating 680+)

How to qualify for an SBA loan

Now that you have a better understanding of how SBA loans work, including their pros and cons let’s talk a bit about how to qualify for an SBA loan.

Keep in mind that there are overarching SBA-required qualification factors and there are other program-specific factors as well, so see below this section for each individual program’s terms and qualification requirements. These qualification factors may overlap, however, in some cases they’re different.

Also, keep in mind that certain factors aren’t written in stone. For instance, annual revenue isn’t a hard-line amount. Rather, a certain annual income is suggested.

Here are the most important qualification factors you should keep in mind:


The most important factor for being approved for an SBA loan is your credit score and history. SBA loans require a 680+ credit score, putting them at the high in terms of credit requirements for small business financing options.

Annual revenue

SBA loans generally require an annual revenue of around $180,000 or higher. This isn’t set in stone, however, and more is definitely better.

Time in business

SBA loans generally require 4+ years in business. This is universal among virtually all SBA and non-SBA lending programs as the lender needs to see that you have a solid and consistent track record.

Paperwork required for approval

In addition to the above factors, certain paperwork is required to apply and be approved for any SBA-backed loan.

Keep in mind that SBA loans take a lot of time and effort and aren’t a good option if you need funding quick. As mentioned earlier, SBA loans have a ton of benefits, however, they’re slow to be approved, take a lot of paperwork, and are difficult to be approved for especially compared to other alternative lending products.

However, if your credit and other factors meet the requirement and you’re not in any rush, an SBA loan is one of your best options for funding your small business effectively and with the best terms available.

Each lender will have their own application (ours takes less than 2 minutes). In addition to this, these documents may be required for approval depending on the program:

  • Business license
  • Business check (voided)
  • Business plan
  • Debt schedule (Download the ECM business debt schedule here)
  • Personal and business tax returns (Past 3 months)
  • Personal and business credit reports
  • Business bank account statements
  • Balance sheet
  • Personal financial statement (Download the ECM personal financial statement here)
  • Articles of incorporation
  • And drivers license

SBA loans are ideal for small business owners looking for flexible, cost-effective financing options. Let us help you find the perfect SBA product to drive your business forward.

Complete our short application to see what you qualify for.

Types of SBA loans

An SBA loan isn’t a single type of loan or program. Rather, it’s a blanket term which refers to several different loan products offered by the SBA.

There are 6 primary SBA loan and funding programs:

Each SBA loan fulfills a unique purpose depending on what stage of business you’re in, your needs, and business activity.

Below, we’ll break down each SBA loan and financing program in more detail so you know which is the best fit for you and your business.

SBA 7(a) loans

The most common type of SBA loan, 7(a) loans are most often referred to simply as “SBA loans” given their popularity. In fact, they’re so popular, they occupy 65% of the SBA’s portfolio.

The reason is no surprise: 7(a) loans are the closest to a traditional business loan among all SBA offerings. They can be used for virtually any business purpose from working capital to purchasing inventory, business property, and buying equipment.

Types of 7(a) loans

Aside from the standard 7(a) loan, there are two unique types of 7(a) loans. Those are:

1. SBA Express loan

As we’ll touch on a few times in this guide, one of the few drawbacks of an SBA loan is how long the application and approval process can take. The SBA remedied this by creating the SBA Express loan.

While it doesn’t expedite the actual approval process, it does guarantee a response to your application in under 36 hours. That means from the minute you submit your application with an approved lender you’ll receive a response within a day or two.

As opposed to standard 7(a) loans, only 50% of Express loans are guaranteed by the SBA, meaning the interest rate you’re approved for likely won’t be as good as with a standard 7(a) loan. The loan maximum is also less at $350,000.

2. SBA 7(a) Advantage Loans

The SBA 7(a) Advantage loan is another unique offering that allows those who are eligible but do not qualify for a standard 7(a) loan obtain comparable funding.

The program is specifically designed to serve those who may not have qualifying revenue or qualifying business statistics, no collateral, or another qualifying factor.

As opposed to the SBA Express loan, Advantage loans are expedited as well but with an 85% guarantee up to $250,000. This makes them highly desirable for lenders, allowing the SBA to bridge the gap between lenders and those who might otherwise not be able to qualify for an SBA loan.

SBA 7(a) loan terms

All SBA loan types have virtually the same rates and terms, which some variance (most of which was mentioned above).

Below are the standard SBA 7(a) loan rates and terms:

  • Interest rate: 2.25% – 4.75% + prime rate (Approved interest rate depends on credit, repayment plan, and whether the loan is fixed or variable)
  • Fees:
    • Origination fee: 0.5% – 3.5%
    • Packaging fee: $2,000 – $4,000
    • Guarantee fee: 2% – 3.5%
  • Loan amount: $5 million maximum
  • Repayment: 10-year monthly repayment plan (25 years for real estate purchases)

SBA 7(a) loan requirements

You’ll need to meet these minimum requirements to qualify for all SBA loans on this list:

  • Credit score: 680+
  • Cash flow/debt: Your business must be profitable and you must have a DSCR of 1.25 or higher, meaning you have cash available to pay all your current debt with leftover.
  • No negative financial marks (i.e. liens, bankruptcies, or foreclosures)
  • Time in business: 2+ years
  • *Down payment: 10% of the loan amount (Only applies if you’re purchasing a business or real estate property)

And you’ll need to meet these additional eligibility guidelines to qualify for a 7(a) loan:

  • Must be in a qualifying industry (most industries are eligible)
  • Must be a small business as defined by SBA guidelines (Primary criteria here is either less than 7.5$ million in annual sales or below 500 employees)
  • Must be a for-profit business doing business in the United States or property owned by the U.S.
  • Must be able to demonstrate a need for the loan and have used other financial resources to cover the need, including personal equity, before applying for the loan
  • Use of funds must be in line with SBA policy goals (primarily has to do with creating new jobs or, at a minimum, retaining existing ones)

You’ll also want to have some sort of potential collateral in place. While this isn’t an SBA requirement, you’ll hard-pressed to be approved by a lender without any form of collateral available. However, it all depends on the lender.

Also, keep in mind that while startups can get any kind of SBA loan, the requirements for startups are a bit different and much more strict. If you’re a startup, you’ll want to have 700+ credit, a thorough written business plan, and must have extensive industry experience among other things to qualify.

How to apply for a 7(a) loan

First, make sure you meet the eligibility requirements listed above. Once you’ve done that, it’s time to decide what loan provider to go with to service your loan.

As mentioned earlier, an SBA loan isn’t offered directly by the SBA itself but rather they work with lenders to offer the various SBA loans. That means you’ll need to work directly with a lender who is authorized to provide SBA loans.

There are several ways you find an SBA-approved lender. First, you can use the SBA’s Lender Match to let the SBA match you with an approved lender.

In addition to this, you can search based on the type of SBA loan or offering you’re interested in and compare lenders yourself if you prefer to do the dirty work.

Also, you can use a broker to help you identify your ideal lender. Brokers are helpful because they have a deep knowledge of various lenders that offer SBA loans and can match you with your ideal lender much more easily than you could do on your own. In addition to this, a broker will help you organize your paperwork and application so that it has the best chance of approval.

We’ve worked with small business owners for years, matching them with the perfect SBA lender based on their needs and helping them organize their applications so they can maximize their chance of approval.

If an SBA loan sounds like a good fit for your needs, we can help match you with your ideal preferred lender for your business and expedite the process to get you approved as quickly as possible.

Click here to complete a short application and see what Excel Capital can do for you.

SBA 504 (CDC) loans

Certified Development Company (CDC) or 504 loans are business loans designed most notably to help small business owners purchase equipment and purchase or construct owner-occupied real estate.

A 504 loan places two lenders and a borrower (you) together to pay for said development or purchase. Each party pays a specific percentage towards the loan in cash:

  • Bank or other lender: 50%
  • CDC: 40%
  • Borrower: 10%

The borrowers part comes typically in the form of a cash-based down payment with you essentially taking two loans out on the remaining 90% investment (at the above 50/40% split) coming from the combined amount of the two lenders.

SBA 504 loan terms

The two loan portions that together form a 504 loan each have different terms. Together, the interest rate on a 504 loan tends to be between 4-6% and with up to a 25-year repayment plan.

Below are the CDC portion rates and terms:

  • Portion of 504 loan: 40%
  • Interest rate and repayment (two available plans which generally break down as follows):
    • 10-year repayment: Fixed rate of about 4.92%
    • 20-year repayment: Fixed rate of about 5.19%
  • Fees:
    • CDC Servicing fee: .625% (1/8 of a percent) – 2% (1.5% maximum for rural areas)
    • SBA Monthly Guarantee fee: .914% (9.14/10 of a percent, just under 1%)
    • Servicing Agent fee: .1% (1/10 of a percent)

And below are the bank or other traditional lender portion rates and terms. However, keep in mind that the SBA does not impose limits on the terms of the bank/lender portion of a 504 loan:

  • Portion of 504 loan: 50%
  • Interest rate: 5 – 9.75%
  • Repayment: 5-10 year repayment term amortized over 20-25 years
  • Fees: Several one-time fees are associated with the lender side of a 504 loan, typically amounting to 2.5-3% of the loan’s value. These include:
    • Legal fee
    • Processing fee
    • Funding fee
    • Debenture underwriting fee

In addition to these terms, there is a $14 million maximum per 504 loan with a $20 million combined maximum for multiple 504 loans.

SBA 504 loan requirements

The minimum qualification requirements for an SBA 504 (CDC) loan are:

  • Credit score: 680+
  • Net worth: Less than $15 million (tangible assets)
  • Down payment: 10% of the project’s cost
  • Financial: Cannot be invested in rental real estate of any kind nor be able to access necessary capital for the project via any other means (personal equity, cash, etc.)
  • Property: Must be 51% or more owner-occupied
  • Must prove you’ll be able to pay back the loan using the estimated cash flow from the business which will be operating out of said property

If your business depends on obtaining a new or larger property, and you can prove that the business will be able to pay back the loan from the cash that flows into the business, a 504 may be a good fit.

How to apply for a 504 loan

Most SBA loans have a similar application process to the 7(a) loan which we discussed in the previous section. However, in the case of a 504 loan, you’ll also need to provide any available paperwork connected with the property.

To get a 504 loan started, you’ll need to locate a CDC who is willing to work with you. To do that, you can use the SBA’s CDC Finder tool online at: sba.gov/funding-programs/loans.

You’ll also need to locate a bank for the other portion of the loan. However, most CDCs will have banks they’ve worked with in the past and can recommend. Alternatively, you can also check with your local SBA district office to see if they have a list of suggested bank lenders at: sba.gov/tools/local-assistance/districtoffices.